Intel 2007 Annual Report Download - page 97

Table of Contents
INTEL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
In June 2005, we received an inquiry from the Korea Fair Trade Commission (KFTC) requesting documents from our Korean
subsidiary related to marketing and rebate programs that we entered into with Korean PC manufacturers. In September 2007,
the KFTC served us an Examination Report alleging that sales to two customers during parts of 2002–2005 violated Korea’s
Monopoly Regulation and Fair Trade Act. In December 2007, we submitted our written response to the KFTC. We intend to
contest this matter vigorously in the administrative procedure and, if necessary, in Korean courts.
In January 2008, we received a subpoena from the Attorney General of the State of New York requesting documents and
information to assist in its investigation of whether there have been any agreements or arrangements establishing or
maintaining a monopoly in the sale of microprocessors in violation of federal or New York antitrust laws.
We intend to cooperate with and respond to these investigations as appropriate and we expect that these matters will be
acceptably resolved.
Barbara
’s Sales, et al. v. Intel Corporation, Gateway Inc., Hewlett-Packard Company and HPDirect, Inc.
In June 2002, various plaintiffs filed a lawsuit in the Third Judicial Circuit Court, Madison County, Illinois, against Intel,
Gateway Inc., Hewlett-Packard Company, and HPDirect, Inc. alleging that the defendants’ advertisements and statements
misled the public by suppressing and concealing the alleged material fact that systems containing Intel
®
Pentium
®
4
processors are less powerful and slower than systems containing Intel
®
Pentium
®
III processors and a competitor’s
microprocessors. In July 2004, the court certified against us an Illinois-only class of certain end-use purchasers of certain
Pentium 4 processors or computers containing these microprocessors. In January 2005, the court granted a motion filed jointly
by the plaintiffs and Intel that stayed the proceedings in the trial court pending discretionary appellate review of the court’s
class certification order. In July 2006, the Illinois Appellate Court, Fifth District, vacated the trial court’s class certification
order. The Appellate Court instructed the trial court to reconsider whether California law should apply. However, in August
2006, the Illinois Supreme Court agreed to review the Appellate Court’s decision. In November 2007, the Illinois Supreme
Court issued its opinion finding in favor of Intel on two issues. First, on the issue of whether Illinois or California law applies
to the claims of Illinois residents for goods purchased in Illinois, the Court found that Illinois law applies, rejecting the
Appellate Court’s finding of a nationwide class based on the application of California law. Second, on the issue of whether
any class should be certified in this case at all, the Court held that no class should be certified, reversing the trial court’s
finding of an Illinois-only class based on Illinois law. The case has been remanded to the trial court.
Transmeta Corporation v. Intel Corporation
In October 2006, Transmeta Corporation filed a patent infringement lawsuit against us in the United States District Court for
the District of Delaware alleging that our P6, Pentium 4, Pentium
®
M, Intel
®
Core
TM
, and Intel
®
Core
TM
2 processors
infringed ten Transmeta patents, and subsequently filed an amended complaint alleging that our processors infringed an
eleventh Transmeta patent, alleged to cover computer architecture and power-efficiency technologies. We filed counterclaims
against Transmeta alleging that Transmeta’s Crusoe*, Efficeon*, and Efficeon 2* families of microprocessors infringed seven
of our patents. Both parties sought damages, treble damages, an injunction, and attorney’s fees.
In October 2007, Intel and Transmeta agreed to settle the patent infringement cases between them. The agreement, which was
finalized in January 2008, provides us and our customers with a broad license to all Transmeta patents and patent applications
now existing or as may be filed during the next ten years, including any patent rights acquired by Transmeta. Transmeta also
agreed to transfer certain technology to us and granted us a non-exclusive license to Transmeta’s LongRun* and LongRun2*
technologies and future improvements. In addition, we will receive a general release from all claims of any type. In exchange,
we made an initial payment of $150 million to Transmeta in the first quarter of 2008 and will make five annual payments of
$20 million beginning one year from the date of the settlement, for total payments of $250 million. The agreement also
includes a covenant by us not to sue Transmeta for certain licensing to third parties. The court dismissed all litigation pending
between us and Transmeta.
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